Exchange Online, SharePoint Online boon for mid-sized businesses

Budget-conscious mid-sized companies egging to build a data centre on the cheap stand to benefit from Microsoft’s release on Monday of two hosted business productivity services.

However, firms need to consider their options carefully before fully committing their resources and information assets to Redmond’s new Exchange Online and SharePoint Online, according to a Canadian IT industry analyst.

“These services are based on pretty good Microsoft products but companies need to diligently investigate several key issues before jumping right in,” said George Goodall, senior research analyst for Info-Tech Research Group in London, Ont.

Exchange Online, a hosted version of Microsoft’s messaging software, and SharePoint Online, a hosted collaboration application, are part of the Microsoft Online Services suite but also are available as individual services.

Sidebar: Hosted app pros and cons. Find out if hosted applications are for your company

In addition to Exchange Online and SharePoint Online, the full suite includes Office Communications Online, a hosted unified-communications offering, and Office Live Meeting, a hosted Web-conferencing application. The subscription price for the suite, which Microsoft unveiled in July, is US$15 per user, per month.

Individually, Microsoft will be selling hosted Exchange Online for $10 per user, per month; SharePoint Online for $7.25 per user, per month; Office Communications Online for $2.50 per user, per month; and Office Live Meeting Online for $4.50 per user, per month, the company said.

InfoTech’s Goodall said the two services are essentially a “natural progression” of Microsoft’s cloud computing initiatives which were highlighted some two weeks ago with the announcment of Azure.

Azure is a hosted application-development environment that eventually will be the framework for all of its own hosted services.

“With the growing interest on software-as-a-service offering, Microsoft introduced its own ‘software-plus-service’ product – a sort of backup option to the traditional premise software approach,” he said.

This later evolved, Goodall said, to cloud computing efforts that enable customers to reduce data storage expenses by using bandwidth to stockpile data.

The original SharePoint and Exchange products are very popular among users and it “only makes good sense” to combine them with cloud computing, he added.

Goodall believes the new services will be a hit among organizations with 20 to 100 employees which do not have a large IT staff or a robust data centre but need to rapidly deploy one.

“These services will substantially cut initial capital outlay and will streamline data centre deployment,” he said.

Goodall, however, warned that early adopters need to realize that SharePoint and Exchange have their limitations.

“These tools are among the easiest and fastest to deploy but many users have complained about experiencing difficulties in configuring them to match their organization’s needs,” he says. (Forrester warns of SharePoint chaos) “The issue is not how to get it to work, but rather how to get it to do what you want it to do.”

The Info-Tech analyst said users must also consider three factors:

Life cycle cost – Hosted applications are cheap in the short term but could end up more expensive that their premise-based counterparts in the long run. “It’s much like paying for a rental car. At $50 day, it’s a definite bargain. But it’s probably more expensive than buying a car when you have to rent it for two years.”

Reliability issues – Goodall cautions that cloud-based services have been recently plagued by disruptions and power outages such as those suffered by Google Docs,  Amazon and

Reason for purchase – Is cloud computing being extended across the organization or only to key personnel? Will the system be used for the company’s entire operations or only as a back-up?

Meanwhile, Microsoft has said it will release Office Communications Online and Office Live Meeting Online as individual services early next year.

Microsoft has slowly been rolling out hosted versions of its business software as part of its move to embrace Web-based services and move away from its software legacy. However, it is doing this in a gradual way, calling its strategy “software-plus-services” to show that it will still give customers a choice between running software in their own IT networks, having Microsoft host it for them, or some combination of both.

Microsoft also is allowing business partners to resell and host its business software for their customers. However, by entering the market with its own hosted suite, Microsoft also is competing with them, which has irked some longtime partners.

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